Wednesday, January 30, 2013

The late former Wachovia Corp. CEO John Medlin has been honored by the N.C. Bar Association for his contributions to the justice system.

He was best known, of course, as the man who steered the bank from a regionally-focused institution to the 20th-largest bank in the country while CEO from 1977 to 1993. Former colleagues described him as a "legendary banker and an icon" as they reflected on his death in death in June.

But Medlin also led the Commission for the Future of Justice and the Courts in North Carolina, a 27-member panel of business, legal and community leaders brought together to help improve the justice system in the state.

He will be the first person to be honored with an award that will bear his name. The John G. Medlin Jr. Award will recognize non-lawyers who contribute to the justice system.

That puts North Carolina as No. 33 in the country in that regard. While many of them are low-income, the group found that 32 percent of households with annual incomes $48,601 and $80,100 fit the designation.

South Carolina ranked a little better: 47 percent of its residents do not have three months' savings, putting the state at No. 29. The national rate is 43.9 percent.

The group warns that a lack of savings can keep families from owning a home or saving for college.

"In order to cope with the recession’s continued impact, these families have had to prioritize today’s expenses over tomorrow’s goals,” said Andrea Levere, president of the Corporation for Enterprise Development, in a statement.

BNC also bought banks in Durham and Charleston, and purchased branches in Chapel Hill and Cary. It finished a $72.5 million capital raise and closed "unproductive offices."

The bank's $8 million profit for the year is 78 percent higher than in 2011. For the fourth quarter, BNC reported a profit for shareholders of $4.4 million, up from $796,000 in the same period the year before.

Tuesday, January 29, 2013

Bank financial statements have never been accused of being easy to comprehend. Take Yadkin Valley Financial Corp., which reported fourth quarter earnings last week and touted its "Problem Asset Disposition Plan."

What's that mean? They're selling land. Lots of lots of land.

Here's one of the 'problem assets' to be auctioned

A notice about an upcoming auction from the Iron Horse Auction Co. gives a pretty unusual look into what "problem assets" actually look like, and how a bank can choose to get rid of them.

In short, the bank is auctioning off 170 properties across 17 North Carolina counties and three South Carolina counties.

In the Charlotte area, this includes everything from a mobile home on a lot in Iredell County (see above picture) to 44 acres across from a golf course in Cabarrus County.

Dozens more properties, mostly vacant lots, are being sold in the mountains and in the east. The Iron Horse sites have descriptions and aerial photos of them all.

Yadkin Valley Financial noted in its earnings report that it has already written down the value of these properties -- called OREO, or "other real estate owned" in bank parlance -- to the price it expects to get at the auction.

The bank's loan book grew over the course of the year and it set aside less for bad loans.

The stock dividend of 20 percent will be payable March 5 to shareholders as of Feb. 15. CEO Jim Marshall called it a "thank you to our shareholders who have been with us during some challenging business times," according to a statement.

BlueHarbor also said it would buy back $250,000 of its own stock over the course of 2013, or about 2.5 percent of the 1.9 million shares outstanding.

Bank of America began hosting a mortgage outreach workshop at the Charlotte Convention Center today, aimed at helping the 4,500 people within a 75-mile radius of the city with a loan serviced by the bank that's more than 60 days delinquent.

The event, open from 8 a.m. to 8 p.m., will last through Thursday. People interested in attending are encouraged to register online at BankofAmerica.com/HomeLoanHelp.

It's the third year Bank of America has held such an event in Charlotte. It's now done about 1,200 around the country since 2009.

How it works: After registering, homeowners will first take a brief class that gives them an overview of different terminology like short sales, deeds-in-lieu, and forbearance. They'll then meet with nonprofit Alliance Credit Counseling to get a read on their situation. If the homeowner has all of the correct paperwork, an underwriter can then get the ball rolling on a loan modification, forbearance or short sale.

About 300 people have registered so far, said Tamika Eubanks, Bank of America senior vice president for national mortgage outreach events. The bank services about 300,000 loans in North Carolina. About 11 percent are delinquent.

Monday, January 28, 2013

Keep a look-out when you swipe your credit card. It could soon get a little more expensive -- at least in some places.

You might recall hearing last summer about a $6 billion settlement between merchants like Walgreens and credit card issuers and big banks -- like Visa and Bank of America. The stores for years had said the banks and issuers had colluded to set swipe fees and prevent the merchants from recouping any of that money.

Update: After seeing some of the comments, I decided to update with more information. This only applies to credit cards, not debit cards or prepaid cards. Merchants still can't add surcharges on debit card transactions.

This is also not part of Dodd-Frank. The confusion comes from the Durbin Amendment of Dodd-Frank, which capped swipe fees on debit card transactions. It got a lot of attention when it went into effect in fall 2011. It deals with a similar topic, but is not the same.

The Elkin-based bank reported Thursday losing $25.3 million, compared with a loss of $88,000 the quarter before and a $2.2 million profit in the fourth quarter of 2011.

But Yadkin Valley was able to charge off $33.6 million of nonperforming loans and foreclosed real-estate -- much more than it usually does in a single quarter. In October, the bank said it had finished raising $45 million in capital for just that purpose.

Arnold Donald, 58. He's now an investor and management consultant, but led tabletop sweetener manufacturer Merisant from 2000 to 2003. Before that, he spent several decades at agriculture company Monsanto.

Lionel L. Nowell III, 58. He was treasurer of PepsiCo from 2001 to 2009. He's also worked with RJR Nabisco, Pillsbury and Pizza Hut.

Cornelius-based Aquesta Bank earned $305,000 in the fourth quarter, a jump of nearly 300 percent from the year before, the bank said Wednesday.

Its full-year income of $1.1 million also reversed a loss of $928,000 in 2011. The bank set aside less for bad loans, while deposits grew. Aquesta Bank earned $78,000 in the fourth quarter last year.

"Our net income, core deposit growth and asset quality all reflect tremendous improvement since the lows of the recession," CEO Jim Engel said in a statement. "While loan demand remains weak, we have seen some recent improvements in that area too.”

Charlotte-based Bank of Commerce posted a loss in the fourth quarter, but finished 2012 with a year-end profit, the bank said Wednesday.

The commercial bank lost $96,000 for shareholders in the quarter. But it made $101,000 over the year as it set aside less money for loan losses and lost less money on foreclosed properties. In 2011, Bank of Commerce lost $1.8 million.

Tuesday, January 22, 2013

Wells Fargo's board approved a 14 percent increase to the bank's dividend Tuesday, or 3 cents per share. The increase, to 25 cents per share, was approved by the Federal Reserve as part of last year's capital plan.

The San Francisco bank sent in its capital plan for 2013 on Jan. 4, and it is still being reviewed. CEO John Stumpf said on an earnings call earlier this month, and again in a statement today, that the bank has asked for increased capital distributions this year.

As banks continue to reconcile customers' increasing online habits and low interest rates with expansive (and expensive) branch networks, the nationwide total has been steadily dwindling. But the fourth quarter, with a net loss of 229 branches, represented a "spike," SNL said. Charlotte's Bank of America closed the most across the country, with a net 47.

Another North Carolina bank, BB&T, ranked fourth in that category, closing a net 22 branches in the quarter. The Winston-Salem bank has already announced, however, that it will open 30 branches in Texas in 2013.

BB&T said Tuesday the Fed didn't have any objections to its capital plan last year, which included this dividend. The country's largest banks were required to submit 2013 capital plans to the Federal Reserve for approval by Jan. 7.

Four years ago, President Barack Obama didn't allow corporate money to go toward paying for the balls and parties accompanying the swearing-in. Monday's galas will also include cash from companies like Microsoft and AT&T.

The list does not give dollar figures for inaugural contributions. Last year, Bank of America gave $5 million to a nonprofit fund affiliated with the Democratic National Convention in Charlotte.

Friday, January 18, 2013

Here is a sampling of what analysts and investors said or wrote about their results, in two words or fewer from each. Some are taken from research notes sent to the Observer, the rest from quotes given to other news outlets.

Interest rates certainly aren't great, but if you're storing money at a North Carolina bank or credit union, you're doing better than most.

So says a new report from Go Banking Rates, which tracks rates paid on savings accounts and CDs around the country. It says that North Carolina's average rates are third highest in the nation on short-term rates, though the ranking drops as the terms get longer.

Here's the charts they pulled together:

Deposit Account National Averages

Account Type

Average Rate

6-Month CD

0.31% APY

1-Year CD

0.46% APY

2-Year CD

0.69% APY

Savings Account

0.21% APY

Average North Carolina Interest Rates

Account Type

Average Rate

6-Month CD

0.42% APY

1-Year CD

0.54% APY

2-Year CD

0.73% APY

Savings Account

0.29% APY

Why is this? Go Banking Rates posits that the state's high unemployment rate has spurred people to keep money in more liquid accounts, raising demand for short term CDs.

Thursday, January 17, 2013

Bank of America's earnings again were filled with noise. Here are a couple other things executives discussed.

No word on dividend. CEO Brian Moynihan did not give any detail into what the bank asked the Federal Reserve as far as dividend increases or stock buybacks this year, but he did say the bank intends to return more capital to shareholders in the future. The bank's dividend has been stuck at a token 1 cent per share for more than four years. "We're in a better position this year than last year and we'll let you know once we get through the test," he said.

Fiscal cliff. Just like Wells Fargo, Bank of America said it was boosted by the "fiscal cliff" debate. Chief Financial Officer Bruce Thompson said client activity in its wealth management division was "quite robust" as Congress debated the automatic tax increases and spending cuts. A lot of investors decided to change up their portfolios because of a possible market sell-off and potential increase in the taxes on dividends and capital gains.

Changing habits. Mobile is still growing rapidly at Bank of America, while brick-and-mortar branch numbers continue to shrink. Bank of America is signing up 10,000 new mobile banking customers per day, Moynihan said. They now have 12 million mobile banking customers, up 8 percent from last quarter. At the same time, the bank dropped a net 62 branches, or a little more than 1 percent.

Wednesday, January 16, 2013

Regions Bank will no longer offer a product criticized as a payday loan in North Carolina after pressure from activist groups and the state's attorney general.

Known as "Ready Advance," the product allowed customers to take out a small, short-term line of credit for a fee of $1 per $10 borrowed. A 21 percent interest rate applied on unpaid balances.

The N.C. Justice Center and Durham-based Center for Responsible Lending had been vocal in their opposition to the loans and described them as predatory "payday loans."

Payday loans are illegal in North Carolina. Regions was able to offer them here because they have an Alabama state charter, meaning they're not subject to many of this state's banking laws.

“This is a victory for all North Carolina consumers,” Jeff Shaw of the N.C. Justice Center said in a statement Wednesday. “Especially in the wake of the bad lending that led to the financial crisis, banks should understand that the last thing we need is destructive loans that drag cash-strapped families down even further.”

N.C. Attorney General Roy Cooper also said in September that he wanted to find a way to stop Regions from offering them here.

Regions told the Observer today that the bank made the decision to discontinue the product in mid-December.

"Our customers in North Carolina have given Ready Advance high ratings; however, based on a number of factors, including the small number of eligible customers in the state, we have made the business decision to stop offering the product in North Carolina," the bank said in a statement provided by a spokeswoman.

It is the only state in which Regions is discontinuing the product. The bank has defended the loans as an entry-way to credit for people without an established history or who need to improve their scores. The bank said they were not payday loans.

Regions said half of the customers had incomes above $50,000 per year and described the typical customer as similar to checking account holders but with lower savings balances.

Fewer than 200 payday loan accounts had been activated in the state since May 2011, the bank said. Customers will be notified by letter of the change.

Regions has three branches and about $236.6 million in deposits in the Charlotte area, according to FDIC data.

Tuesday, January 15, 2013

Once again, Charlotteans watching the Super Bowl will find a Charlotte Metro Credit Union ad in between the traditional spots for Budweiser, Chevy and Pepsi.

It won't be funny like the last ones were, but instead will focus on the idea of a "happy place." The spot was filmed in Charlotte -- at the U.S. Whitewater Center and uptown -- and produced by Durham firm Simple Syrup.

The credit union didn't say how much it plunked down for the spot, but all accounts point to this year being the most expensive Super Bowl to date. Advertisers plunked down up to $4 million per 30-second spot this year, up from an average of $3.5 million last year, according to The New York Times.

This, obviously, would air only locally where numbers aren't as readily available. The Times report said the local New York City affiliate charged upward of $1 million per 30-second spot. Presumably Charlotte would be a bit cheaper than that.

Friday, January 11, 2013

You know by now the top line number from the Wells Fargo earnings report today: profits of $4.9 billion for shareholders (another record). Here are a couple other things worth noting:Fiscal cliff actually helped the bank's loan book. All the talk last month was about uncertainty associated with the political showdown over the automatic tax increases and spending cuts. But the debate actually helped boost Wells Fargo's loan portfolio. "I would say the fiscal cliff was a net positive to loan growth," Chief Financial Officer Tim Sloan said on a call with analysts. He said some of the bank's corporate clients increased their loans, particularly at the end of December, as the specter of higher taxes in the future loomed. The bank's core commercial loan portfolio grew 3 percent from the quarter before, to $358 billion.

Real estate footprint shrinking. Wells Fargo shrunk its office holdings by 4.5 million square feet in 2012, Sloan said, as the bank continues to try to cut costs. The bank's eliminated 16 million square feet total since 2008.

More capital to shareholders requested. Sloan confirmed that Wells has asked the government for the go-ahead to distribute more capital to shareholders in 2013 than it did in 2012. He didn't give any indication on what combination of dividend increases or share buy-backs that entailed. Sloan said later on the call that the bank does want to buy back more shares in the coming years. Wells repurchased 120 million shares in 2012 and increased its dividend from 12 cents to 22 cents.

Are more legal settlements coming? The bank's earnings included a $644 million loss stemming from a legal settlement announced Monday on mortgage servicing. One analyst asked whether Wells expects another round of legal activity when it comes to mortgage issues. The response from CEO John Stumpf: "We put a lot of that stuff behind us. Some of that is inherent to the business; as the business gets better, I'd expect less of that but I'm pleased with how much we've gotten through." When pressed, he added this: "I can’t predict what’s all going to come up. But I’ll tell you, I'm pleased that we’re this far through.”

Changes possible at branches. Wells Fargo says it has a branch -- or store, as the bank calls it -- within two miles of half the American population. But banks like Bank of America have been trimming their networks as more activity moves online. Stumpf got a question about what Wells was planning when it comes to branches. After touting the bank's reach and saying most customers still decide on a bank based on proximity, he hinted that changes could be coming to the size of its branches and its staffing levels. "That needs to evolve and it is evolving."

Qualified mortgage rule a good step. The banking industry is still taking in the 800-page "Ability to Repay" mortgage rule issued Thursday, which seeks to prevent risky lending. While joking that he hadn't read the whole thing yet, Stumpf called the rule something that would benefit consumers. "It provides clarity and I think it's going to help more Americans get more credit," he said. "That's good for housing and good for America."

Thursday, January 10, 2013

Charlotte private equity firm Carousel Capital announced Thursday that it has closed its fourth fund after raising $265.5 million.

It marks the firms largest fund. Carousel closed its third buyout fund, totaling $210 million, in 2007.

The money from the fourth fund will be used to continue the firm's strategy: purchasing companies headquartered across the Southeast, focusing on business services, consumer products and services and healthcare.

Managing Partner Bill Hobbs said in a statement that Carousel has already committed 20 percent of the fund in two investments. One of those, in the Express Oil Change & Service Center chain, was announced Wednesday.

A member of North Carolina's congressional delegation has come out with a statement listing some worries he has about the new mortgage rules announced today that will restrict who will qualify for a loan.

The Consumer Financial Protection Bureau rolled out a rule today known as the "Ability to Repay" rule, which seeks to make sure nobody is issued a loan they won't be able to afford. A new category known as "qualified mortgages" will adhere to strict debt-to-income ratios and other measures. Banks that issue qualified mortgages will be protected from lawsuits.

U.S. Rep. Patrick McHenry, a Republican who lives in Denver, N.C., and a member of the House Financial Services Committee, said he's concerned about the new rule.

McHenry's statement:

“As our economy continues to rebound, it’s critical that housing policy appropriately balances consumer protections with sufficient access to credit for consumers. While it is good to see the CFPB decided to grant ‘safe harbor’ protection, I remain concerned that this one-size-fits-all definition will regulate out of existence legitimate lending to worthy consumers. I would hate to see young, first-time homebuyers who are just getting their financial start denied lending because of over-zealous government regulations.”

Wednesday, January 9, 2013

Rising student loan debt and default rates aren't about to damage the national economy, but they should force a reckoning on how the country perceives the value of higher education and its alternatives, Wells Fargo chief economist John Silvia said at the Charlotte Economics Club's meeting Wednesday.

Of course, the issue isn't without national implications. The pile of debt students are taking on is pushing back when they're able to buy homes. Since the majority of loans are federally backed, the country could be heading toward some type of student loan bail-out as well, Silvia said.

But the biggest change will be for individuals figuring out what they should do after high school. This economy isn't like it was 35 years ago, Silvia said, when a four-year degree was a mark of distinction and a pretty clear path to a job.

That's changed, and it's not just because of the latest recession. The fix will involve an "attitudinal change," he said, that makes trade school an attractive option instead of a push toward sending every student to a four-year university.

"We put too many people in houses they couldn't afford. We put too many people in colleges they couldn't afford," Silvia said. "It's not an embarrassment to have a son or daughter who has his own plumbing company, pulling in $2 million a year."

Charlotte-based private investment firm Carousel Capital said today that it has partnered with the management team of Express Oil Change & Service Center to buy the chain of about 200 shops in the Southeast -- and announced plans to expand.

This is actually the second time Carousel has bought the company. Carousel first partnered with management in a controlling stake in 2005, and sold the company in 2010 to Thompson Street Capital Partners. In the interim, the company's core earnings doubled, Carousel managing partner Bill Hobbs said.

Express is the largest in what is known as "automotive after-market services" in the region, Hobbs said. The strategy now is to open new locations and to buy up smaller competitors.

It's the latest in a number of companies in the automotive arena that Carousel works with. The firm also has had investments in Meineke Car Care Center and Driven Brands.

Tuesday, January 8, 2013

A federal program aimed at increasing small business lending has boosted such loans in North Carolina by $205 million, according to a report from the U.S. Treasury.

Seven North Carolina banks and one Community Development Loan Fund participated in the federal Small Business Lending Fund program, a 2010 initiative that put $4 billion was put into 332 banks and community development loan funds in the U.S. The program has been criticized because $30 billion had been authorized, and a significant portion of the money was used to pay back bailout money in the Troubled Asset Relief Program.

Collectively, the North Carolina institutions have increased their business lending by 25 percent. Here's how each one did.

Citizens South Banking Corp., now Park Sterling in Charlotte: Up 38 percent, to $163 million

The Charlotte office of Paragon Bank is moving until a new building with more space.

The group will now be in a 16,427-square-foot office building at 6337 Morrison Blvd in SouthPark, the bank said. It had been in a 9,562 square-foot space in Two Piedmont Town Center.

The new space was previously used by UBS Financial Services Inc. It's moving to the SouthPark Towers on Fairview Road.

“We continued to be successful and grew our number of employees in Charlotte in 2012 despite hard economic times," Paragon's Charlotte market president, Phillip Jurney, said in a statement. "This new office will provide more space so our employees can work more comfortably in a setting that allows for productivity and planned future growth."

Wednesday, January 2, 2013

Bank of America's shares were up nearly 4 percent by 9:45 a.m., crossing $12 for the first time since May 2011. The Charlotte bank perhaps had the most at risk among its peers had a deal not been reached. Analysts with Guggenheim Securities said in November an impasse could have sent its stock price plummeting.

Citigroup was up 4 percent. Wells Fargo, BB&T and JPMorgan Chase were all up more than 2 percent. The Dow Jones Industrial Average is up about 2 percent as well.